Paraguay ruling favors Monsanto in royalties dispute

A Paraguayan judge rejected on Tuesday a request by soy farmers to block Monsanto Company from collecting royalty payments for use of the biotech company's Roundup Ready seeds in the world's fourth largest soybean exporter.

In their request filed earlier this month, the farmers had argued that the U.S. company's patent on the genetically modified strain had expired. They were inspired by a case in neighboring Brazil where a judge ordered Monsanto to stop charging.

Paraguayan Judge Miguel Angel Rodas threw out the farmers' request for urgent legal protection on the grounds that it was inadmissible due to the complex nature of the dispute, court documents showed. Another case requesting a similar intervention by the courts was dismissed on the same grounds by a different judge last week.

Monsanto charges farmers $4 per tonne of soybeans produced using the Roundup Ready strain, which is resistant to glyphosate-based herbicides and is present in about 95 percent of the beans produced in the South American country.

The company has cited an agreement signed with farming associations in 2004 that established payments for the use of its seed technology.

It says the deal was meant to apply until 2014 and argues that its royalty rights remain in place for as long as there are valid patents on the technology anywhere in the world.

In the middle of the conflict, the government of President Federico Franco authorized the sale of Monsanto's Intacta RR2 Pro seeds, which also help protect crops from caterpillars.

Monsanto has started negotiating with farmers to establish a royalty payment system for the newly approved variety.

Paraguay trails far behind neighboring Brazil and Argentina as a soy exporter, but production is growing steadily and farmers are expected to gather a record crop of 8.4 million tonnes this season thanks to favorable weather.